The Distinction Between Direct and Indirect Costs Depends on Whether

question 121

Multiple Choice

The distinction between direct and indirect costs depends on whether a cost

• A)is controllable or non-controllable.
• B)is variable or fixed.
• C)can be conveniently and physically traced to a cost object under consideration.
• D)will increase with changes in levels of activity.

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Definitions:

Operating Assets

Assets used by a business in its day-to-day operations to generate revenue.

Controllable Margin

A financial metric that represents the amount of profit or contribution margin that management can directly influence through its decisions.

Operating Assets

Assets that a business uses for its day-to-day operational activities to generate revenue, excluding investment and non-operational assets.

Return on Investment

A financial ratio that calculates the profitability of an investment by dividing the net profit by the initial cost of the investment.